The Northridge Earthquake. A reminder of things to come.

In 1994, January at 4:30 in the morning I was lying in bed in Westwood, Los Angeles, wishing I could take off from work. A second later, I was standing in the doorway of my bedroom, holding on as an earthquake rolled through my apartment. I had been living in LA for 3 1/2 years and was pretty used to earthquakes by then. At least once a year something would hit, sometimes substantial, and then you went about your business.

This one felt different. It started rocky, took a long time to rise until it hit a point where it felt like the floor beneath me had dropped. It was at that point I said to myself, “uh, oh.”

Today, while the rumble had been very low, almost undetectable for several years, and the rolling seemed to have started sometime around December, this one seems different too. This one, unfortunately, is our economy.

Life is a series of good and bad circumstances, coincidences and near misses. Any of us with a sense of history know that everything comes around on the guitar if you wait long enough. The Great Depression lasted from 1929 to 1939 - ten years. Fortunes were lost, millions were unemployed, the dust bowl didn’t help and nothing really changed dramatically until we were hired to make armed weapons for allies who’s situation was worse than ours since they were now at war.

The cause of the depression? As explained by Irving Fisher, a well-respected American economist, the following occured in this order:

1. Debt liquidation and distress selling
2. Contraction of the money supply as bank loans are paid off
3. A fall in the level of asset prices
4. A still greater fall in the net worths of business, precipitating bankruptcies
5. A fall in profits
6. A reduction in output, in trade and in employment.
7. Pessimism and loss of confidence
8. Hoarding of money
9. A fall in nominal interest rates and a rise in deflation adjusted interest rates

Don’t know about you, but alot of that sounds pretty familiar. We’re currently down between 7 and 8 if I were to score.

We know pretty well how we got here. The dot-com collapse was a warning, but our government didn’t listen to warnings (please reference the PDB “Bin Ladin Determined To Strike in US”), and their solution for everything was tax cuts and massive spending. We’ve spent like gluttons, giving ourselves massive debts, bought houses that were too big for us and we couldn’t afford, we asked for no sacrifices and gave none, refused to remember the past, and let a free market economy - one that has NEVER regulated itself ever - go absolutely hog wild with no constraints whatsoever. We’ve got ourselves to blame for some of it - that is, for any of us who at any point in the past 10 years refused to look at reality and just plain expected everything to turn out well.

I know it seems to be a reflex nowadays for a liberal to blame Bush, but you can’t get away from the fact that this man’s personal habits, his lack of reflection, and his stubborness made a bad situation much worse - desperately worse - than it should have been. He was ill-equipped for this job and proved it up to his last few days by approving a stimulus that also expected the banks and free market economy to regulate itself. Hadn’t they learned anything?

Well, I hope Obama can get us out of this. Given yesterday’s stock market drop, my hope is eternal. I would like to save more, have retirement, buy a bigger house (I was one of the few, apparently, who did not bite off more than I could chew mortgage-wise. My test limit was to buy a house that my wife and I could still afford even if we were working at MacDonalds), have to worry about my career being in stagnation for a decade, and wonder why I didn’t choose a career as a banker or broker like many of my classmates and spend the last few years fleecing my fellow Americans of their investments - and then their tax dollars - so I could walk away from this nightmare a millionaire.

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From Associated Press:

Now, former President Clinton says he thinks President Barack Obama should talk more optimistically about the prospects that the nation will recover from its current deep economic woes.

Clinton said he wants Obama to assure the people that America will surmount this problem. But at the same time, the former president said in an interview broadcast Friday on ABC’s “Good Morning America” that “I like the fact that he didn’t come in and give us a bunch of happy talk.”

He also said he believes “you will see some good economic news form the stimulus fairly soon.”

For his part, Obama has said he thinks the country will get past the recession, but that it will be a long slog.

I’ll tell ya. I’m with the ex-President on this one. While Obama is proving to be a good steward of the country, he is making a serious misstep in not letting us in on his natural optimism. It might be that he’s just not comfortable putting on “the show.” You know “the show.” You got it from Reagan. You experienced it again with Clinton - those infectous motivational speeches that made you believe the recovery was right around the corner and it was okay to buy that new TV.

Sure, it’s a pile of horseshit most of the time, but our entire economic system is built on this fantasy. Wall Street goes up on good news, down on bad. Why? It’s not always because there are concrete, unchallengable facts. Sometimes there are. But most of the time it’s about a mood. If the mood is good, we’re lifted up. It’s the same feeling as that first day of spring that reaches 60º.

Expect the republicans to try to weight us down with Obama’s pragmatism. They really have nothing left up their sleeves but to hope the economy tanks and find ways to exploit that notion. It’s sad. Nonetheless, we’ve got a smart guy here who hopefully will learn from the mistakes of others.

Politics Barack Obama, Bill Clinton, bush economy, Optimism in politics, stimulus package

Shawn Mallow of WizBangBlog wrote on February 13th the following:

The Bush years don’t seem so bad now, huh?

Aside from the constant harping from the Democrats about Iraq, and charges of fear mongering from the liberal left, the economy was in a state of fiscal fitness.

Yet, how often did we hear, throughout the Bush years, of just how awful the economy was?

Well, Shawn, we heard it CONSTANTLY. No, it wasn’t THE LEFT WING MEDIA that was pronouncing it, but the basic facts - along with word on the street. It’s old news - but in the revisionist mind of the dead-enders there’s always room for another fantasy to be presented as fact.

Well, not this time. Here’s the Washington Post just the other day:

The number of jobs in the nation increased by about 2 percent during Bush’s tenure, the most tepid growth over any eight-year span since data collection began seven decades ago. Gross domestic product, a broad measure of economic output, grew at the slowest pace for a period of that length since the Truman administration. And Americans’ incomes grew more slowly than in any presidency since the 1960s, other than that of Bush’s father.

As they also truthfully point out, the “economic expansion” Bush and his minions like to boast about were numbers filled with as much air as the dot.com bubble. Sure, housing prices increased, but most saw that for what it was - the availability of obscene mortgage products that allowed a bum on the street with two dollars to his name to make some kind of housing purchase. Consumer spending rose, but we all know how - credit cards pumped up with costs few could pay off easily, ever bloating as the last 8 years slowly chugged. And sure, Wall Street made some gains, but the foundation was filled with sand and we are currently at levels seen 6 years ago.

Was any of this foreseeable? Of course it was. Countless articles, news editorials and even film (Maxed Out) gave searing portraits of our credit card culture - and the housing “bubble”, coined by Greenspan, has been referred to by that moniker since 2003.

What we’ve seen over the past 8 years is what we see with every new President - an “attitude” about our culture that becomes part of the public conscience. With Nixon came years of cynicism. With Carter, a down-home feel of getting back to nature. Remember all those ridiculous nature moves - Wilderness Family, Grizzly Adams, etc. With Reagan came the culture of political correctness and renewed jingoism. With Clinton, a laissez faire attitude to sex and with Bush?

Well, Bush gave our culture the gems of his personality - lack of curiosity, fear in black and white, and most profoundly the lifestyle of a spoiled little rich boy (buy now, don’t worry about the credit card. It’ll all work out). For him it was easy. Every dumb financial decision he ever made his family or friends bailed him out of. He even ran our country that way, spending us into oblivion and keeping any regulation at bay (yes, I know Clinton signed Glass-Steagall out of commission, but guess what? That was 9 years ago. No oversight of any sort since - and that doesn’t absolve Chris Cox from sleeping during his entire tenure at the SEC).

So what has the era of Bush given us? An economy that is worse than when he began office. A population out of work or fearful of losing their jobs and an economic collapse that could have been prevented.

But don’t expect that kind of bleak picture from the true believers because even in the darkest hour of this republican disaster we’ve inherited, it’s always someone elses fault. Guess it must all be Obama’s. He has been in office 3 weeks, you know!

Politics bush economy, republican losers, Sanford Weill